Retail landscape shows considerable growth potential, Spinneys eyes expansion in Saudi Arabia: CEO

Spinneys’ CEO, Sunil Kumar

Spinneys’ CEO, Sunil Kumar, said that the Group’s performance in 2023 was strong in terms of sales, driven by significant like-for-like growth and the opening of new stores in both Dubai and Abu Dhabi.

In an interview with Argaam, Kumar added the group has 75 stores in the UAE and Oman. It plans to expand its presence soon in Saudi Arabia.

He added that the retail landscape in both Saudi Arabia and the UAE demonstrates considerable potential for growth, with a projected increase in demand for high-quality fresh food and a diverse range of products being a driving force for Spinneys’ expansion in these markets.

Here’s the full interview with Kumar:

Q: How was the company’s performance in 2023 and what are your expectations for 2024?

A: The Group’s performance in 2023 was strong in terms of sales, driven by significant like-for-like growth and the opening of new stores in both Dubai and Abu Dhabi.

Looking ahead to 2024, we anticipate an exciting year for our business. The roll-out of our new Kitchen by Spinneys dine-in concept is an important diversification play for us, as is our scheduled launch of Spinneys in the Saudi market – where we are aiming to build a footprint in the Kingdom for the first time in our history. We expect to open our first store in Riyadh in 2024, with the aim to open more stores over the coming years.

Q: What is your view on the retail market, particularly supermarkets in Saudi Arabia and the Emirates, and the level of competition within this sector?

A: The retail landscape in both Saudi Arabia and the UAE demonstrates considerable potential for growth, with a projected increase in demand for high-quality fresh food and a diverse range of products being a driving force for our own expansion in these markets.

When you combine healthy projected population growth and positive GDP projections with comparatively lower inflation than OECD countries, the macroeconomic environment in both countries is supportive of consumer spending. In Saudi Arabia, Riyadh and Jeddah are particularly attractive markets for us, given higher household income and share of total population.

When it comes to competition, there are a number of important and established players within the wider grocery segment. At Spinneys, we distinguish ourselves with a differentiated value proposition that is centred on an extensive range of high-quality fresh food products. We also have a powerful vertically-integrated local and international supply chain, that helps us maintain product availability on our shelves, even as other businesses may face supply chain challenges.

Q: How many branches do you have in Saudi Arabia and the Emirates? What are your plans to increase it?

A: We have been continually expanding our store network, which currently stands at 70 stores in the UAE, including 15 Waitrose stores that we operate the franchise for, and five Spinneys and Al Fair stores in Oman. The growth of our store network has been made possible by the strong reputation of our brand, and we expect to open more stores in the UAE this year.

Having recently announced our expansion of the Spinneys brand into Saudi Arabia, we are looking forward to establishing our presence in the Kingdom this year, and we hope to continue to expand our Saudi footprint of stores over the coming years, with a focus on Riyadh and Jeddah.

Q: What challenges are you currently encountering, especially in relation to international shipping and emerging global issues? Additionally, are there any impacts on the company as a result?

A: Our business operations benefit from a powerful, vertically-integrated supply chain, featuring a flexible global sourcing model and owned local production facilities. This setup enables us to effectively navigate the supply chain challenges of the retail industry. With respect to current challenges for Red Sea shipping, the impact remains limited so far. Collaborating closely with our freight forwarders and shipping companies enables us to respond promptly to the situation, and our extensive air freight network helps us to mitigate reliance on shipping.

Q: Is it the company’s strategy to extend its presence into high-income regions? In the case of a widespread expansion across all regions, is there a tendency to adjust prices downward?

A: Our strategy is focused on meeting the needs and tastes of our customers. While we don't specifically target high-income regions, we aim to provide high quality fresh food products with a focus on convenience and accessibility for consumers. Our priority is to deliver value to our customers, and our pricing strategy is reflective of our commitment to freshness and quality across the communities we serve.

Q: Do you intend to delve deeper into online selling? Is there competition from this sector that affects the company?

A: During the Covid-19 pandemic, we launched online shopping platforms for Spinneys and Waitrose, and while our brick-and-mortar stores still significantly outweigh our e-commerce offering in terms of sales, we are seeing strong growth online.

To put that in context, as compared to 0% in 2019, online sales reached 14% for the first nine months of 2023. This is supported both by our own online platform and our partnerships with leading food delivery companies such as InstaShop, Noon and Deliveroo. Our current focus is on developing a refreshed mobile app, to increase convenience for customers.